1. Indy Butany DeSouza Consumer Benefits from the Competitive Provision of Energy Services and the Ontario Smart Meter Implementation

2. Outline  Centrica and Direct Energy.  Factors Contributing to the Decision for Smart Meters in Ontario.  Consultation Process for the Implementation of Smart Meters in Ontario.  Consumer Benefits from the Competitive Provision of Energy Services.  Specific Conditions Required to Achieve Those Benefits.  Summary.

3. Centrica’s Origins British Gas Corporation British Gas plc Centrica plc Privatization Demerger Competition & diversification 1985 1997 1997-2003 BG plc Key Facts Today  US$22bn annual turnover  US$17bn market capitalization  Over 31 million customer relationships  33,000 employees - of which 5000 in North America  Long term credit rating A2/A +

4. Direct Energy in North America  Over 5 million customers in North America.  Energy provider in: Ontario; Alberta; Manitoba; Texas; Ohio; Pennsylvania; Michigan; New England; Connecticut; and, Rhode Island.  Approximately 1.9 million households served in Ontario.  Electricity generation and natural gas production asset ownership.

5. Our Perspective  “We deliver fresh thinking to help you manage your energy costs.”  A competitive energy retailer.  Electricity + Natural Gas + Services  Very strong focus on customer care and customer satisfaction.  Committed to competitive energy markets and to promoting customer choice throughout North America.

6. Factors Contributing to the Decision for Smart Meters in Ontario  Tightening power supply.  Increased demand for power.  The desire to retire coal-fired generation facilities as early as 2007.

7. Summary of Consultation Process for the Implementation Plan  April 2004 – The Minister of Energy in Ontario announced aggressive targets for the deployment of smart meters.  July 2004 – The Minister of Energy issued a directive to the regulator to submit by February 2005 an implementation plan.  Fall 2004 – Stakeholder consultation process.

8. Summary of Consultation Process for the Implementation Plan (2)  January 2005 – The regulator submitted its proposed implementation plan to the Minister of Energy.  Next steps – The government is critically evaluating the proposed implementation plan, will review alternatives and issue the final plan.

9. Private Sector Involvement in Smart Meters  Consumer benefits from the competitive provision of energy services include:  Transfer of risk arising from investment in new technology, products and services from municipalities/taxpayers and ratepayers to investors  Economically efficient allocation of resources and expertise

10. Private Sector Involvement in Smart Meters (2)  Clear incentives for responsiveness to consumer needs and preferences  Product innovation and differentiation  Enhanced consumer choice  Investment in customer service and satisfaction

11. Private Sector Involvement in Smart Meters (3) Competitive entities, acting under ordinary commercial incentives, are better placed than central government/regulated institutions to deliver these benefits while assuming and managing risk.

12. Preconditions for Achieving These Consumer Benefits  Minimum meter and related system specifications.  Unbundling of metering services and related charges.  Data collection and availability.

13. Preconditions for Achieving These Consumer Benefits (2)  Equal access to smart meter data.  Retailer involvement in planning and communications.

14. Preconditions for Achieving These Consumer Benefits (3)  Shared information on deployment schedule for smart meters.  Regulatory oversight to ensure compliance.

15. Summary  There are significant consumer benefits from the competitive provision of energy services.  Competitive entities, acting under ordinary commercial incentives, are better placed than central government/regulated institutions to deliver these benefits while assuming and managing risk.  Consumer tailored value-added goods and services are the result.